IOG plans to drill the Harvey appraisal well in mid-2019 with the programme due to cost £9.6mln.
The company said it will also spend £2.5mln on a field development plan for the Goddard gas field.
It comes after takeover speculation following an approach from RockRose Energy, which has also made a move to acquire IOG debt held by a third party.
Focussing on IOG’s growth plan, chief executive Andrew Hockey said: "The institutional placing, subscription and open offer announced today are a vital step in progressing our plans to become a substantial UK gas producer, delivering excellent returns by unlocking the exceptional value in our portfolio.
“After a challenging period, this funding and associated debt restructuring ensure that the company is firmly on track to advance into an exciting new phase and execute our strategy on behalf of our long-term shareholders and new institutional investors.
“We will now have the time and financial strength to deliver on our two key catalysts to value over the coming months.”
A total of 165.79mln shares will be sold at a price of 10p per share.